Corporate treasury departments have been doing more with less for many years. The size of corporate treasury departments has been going down, or at least, staying the same as they take on more and more tasks. Corporate treasury is, as corporate treasury has proved around the world, an essential function, but what is the minimum size that is effective and efficient?

Minimum size

Other than getting rid of the department altogether, the minimum size of a corporate treasury department is, theoretically, one. But that leaves no  backup and duaL authorisation of documents, deals, etc. So what is the minimum effective size?

In our post, “That doesn’t look right”, we argued that the  risk free minimum is probably four or six:

• one Corporate Treasurer AND an Assistant Treasurer  
• two junior treasury clerks/admin people
• And possibly also:
• two IT/API/algo people (internal or external?)
• on-going consultancy support from time-to-time.

This is probably not going to be accepted by CFOs, so the reduction in corporate treasury department size will continue as they continue their drive to reduce FTEs in their departments.

Too much sophistication and complexity

Corporate treasury is starting to reach the point where there are too many ‘black boxes’ - algorithms, macros, routines/processes, etc., which more and more staff in the department don’t understand how they work. The junior admin staff certainly don’t, and the processes are getting so sophisticated that sometimes even senior corporate treasury staff don’t either. 

The problem is only going to increase as the sophistication and complexity in corporate treasury systems increases. Already corporate treasury departments are employing their own mathematicians to develop the advanced algorithms that required in advanced hedging and risk management routines.

Lack of useful experience danger

Increasingly there is also lack of real experience in the corporate treasury department as the admin jobs requires less and less understanding of corporate treasury processes: the current jobs can be done without much real knowledge of what is being processed. So when something goes wrong only the senior people in the department know what could be wrong, as the junior people are not getting the experience that they need to learn corporate treasury.

Size depends on scope NOT number of FTEs

One of the problems corporate treasurers have today is that ‘consultants’ too often say to their CFO, “But a similar company with same turnover only has ‘X’ FTEs, you could do the same.” They don’t take into account the scope of what the corporate treasury department does.

This type of advice is killing sensible discussion about what the effective size of a corporate treasury department should be.

Basically size of the corporate treasury department is not a meaningful measure, much more important what are the processes carried out and whether they are “fit for purpose” using as much automation as possible to eliminate manual repetitive processes.

Automation brings risk

We are reaching the point in many corporate treasury departments that staff only know that, “You press that button when the system asks you this.” But when something goes wrong, when there is a crisis or they simply want to make changes IT IS A PROBLEM, e.g. there are more and more examples of spreadsheet macros or calendars being out of date with no-one knowing how to fix them. 

The position is getting worse as corporate treasury gets more sophisticated, e.g. the use of AI relies on so many new inputs, and corporate treasury is, in some ways, becoming less agile by being dependent on so many systems and data points. But the pressure to automate and get rid of routine processing will continue.

Another danger with increasing automation and sophistication is that the skill sets and the people become much more difficult to replace.

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CTMfile take: It feels like a staffing crisis in corporate treasury is building, and no-one knows how to fix it. What should the corporate treasury associations be doing about this?